Can insurers pay for the big one

It can be hard to know exactly how much earthquake damage you have. Some types of damage are hard to find at first. You and the claims inspector need to look long and carefully. Make sure that all the damage you can see is listed in your claim, as well as all the possible hidden damage. An insurance company can deny claims that are not reported within one year.

The year starts with a date called the inception of the loss. This is when you first:. If your claim is larger than your deductible, the insurance company will subtract the deductible from their payment. You do not need to spend anything before you can get payment. The questions below can help you decide whether or not to buy earthquake insurance for you and your family. Use the Premium Calculator at www. You may need to do some research about nearby fault lines and the type of soil in your area.

Search for fault lines on the U. A house is likely to have more damage if it is older, or built of brick or masonry, or has more than one story. After a big earthquake, could you afford to repair or rebuild your home? Can you afford to keep paying your mortgage and taxes while you rebuild? The main form of federal disaster relief is the low-interest loan. You must show that you can repay the loan. Grants from the Federal Emergency Management Agency FEMA for emergency home repairs and temporary rent assistance are only for those who do not qualify for loans.

I can't afford earthquake insurance. Are there other ways I can protect my home? There are many things you can do to protect your home and reduce the damage caused by earthquakes. Whether you buy earthquake insurance or not, you should do what you can to protect your home, your belongings, and your family.

Waiting until after an earthquake to buy insurance is not a good idea. It doesn't protect you from the damage you have already had. Also, after an earthquake, insurance companies often do not sell earthquake coverage for a certain period. And when they start to sell it again, the premiums may be higher. Additional living expenses ALE — Your extra costs when you have to live somewhere else while your area is evacuated or your home is repaired.

Agent— A person who is paid by an insurance company to sell their insurance. The CDI licenses agents. Claim adjuster— A person who works at your insurance company and is trained to examine your home for damage and loss and to estimate costs.

Deductible— The part of your insured damages that you pay, before your insurance pays anything. See pages 4—5. Dwelling limit —The most your insurance will pay minus the deductible to repair or rebuild your dwelling. Retrofitting —Changing your home to make it stronger and safer in an earthquake. See pages 8—9. We are the state agency that regulates the insurance industry. We also work to protect the rights of insurance consumers. The Department of Insurance is unable to guarantee the accuracy of this translation and is therefore not liable for any inaccurate information resulting from the translation application tool.

The Department of Insurance is also unable to guarantee the same page layout for all the languages. Depending on the languages, the page layout may look strange from the original.

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A copy of this disclaimer can also be found on our Disclaimer page. Before You Buy Earthquake Insurance Earthquake insurance covers some of the losses and damage that earthquakes can cause to your home, belongings, and other buildings on your property.

Your homeowners insurance does not cover earthquake damage except fire—see page 7. I have homeowners insurance. How can I get earthquake insurance? The offer must be in writing. It must tell you the amounts it covers the limits , the deductible, and the premium.

You have 30 days to accept the offer. The day period starts the date the company mails the offer to you. If you do not reply, you are rejecting the offer. Does earthquake insurance cover all damage from earthquakes? What if I rent?

What if I have a condo? What if I have a mobile home? Visit the CEA website at www2. The limit on your earthquake insurance is the same as the limit on your homeowners insurance dwelling coverage.

You do not have to pay your CEA deductible up front to receive a claim check, it is simply the amount deducted from your total covered losses. As with most earthquake policies, CEA insurance does not cover landscaping, pools, fences, masonry, or separate buildings.

Exterior masonry veneer is not covered unless you add that coverage to your CEA policy. If you rent from someone else or own a condo, you do not need this coverage. Things like china and crystal are covered if you purchase optional breakables coverage. It can cover temporary rental of a home, apartment, or hotel room; restaurant meals; a temporary telephone line; moving and storage; furniture rental; and laundry.

It is bound to a reasonable time needed to repair the home, or for you to move to another permanent home. This coverage never has a deductible under CEA Homeowners Choice Policies The CEA Homeowners Choice policy offers the option of choosing separate coverage for dwellings and personal property, with different deductibles. Loss Assessment for Condo Unit Owners If you are a condo unit owner, your HOA may have insurance for common areas and the exterior structure of the building; however, it may not cover earthquake damage to those common areas and exterior structures.

How do earthquake insurance premiums vary? Common Earthquake Insurance Exclusions Common exclusions in earthquake insurance policies include: Fire Earthquake insurance usually does not cover anything that your homeowners policy already covers. Land Usually, earthquake insurance does not cover damage to your land, such as sinkholes from erosion or other hidden openings under your land.

Vehicles Earthquake insurance does not cover damage to your vehicles. Flood Earthquake insurance does not cover water damage from outside your home, such as sewer or drain back-up, flood, or tsunami.

Popular Courses. Personal Finance Insurance. Key Takeaways The Law of Large Numbers theorizes that the average of a large number of results closely mirrors the expected value, and that difference narrows as more results are introduced. In insurance, with a large number of policyholders, the actual loss per event will equal the expected loss per event.

The Law of Large Numbers is less effective with health and fire insurance where policyholders are independent of each other. With a large number of insurers offering different types of coverage, the demand for variety increases, making the Law of Large Numbers less beneficial.

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This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Insurance Gender and Insurance Costs. Partner Links. Related Terms Uninsurable Risk Uninsurable risk is a condition that poses an unknowable or unacceptable risk of loss or a situation in which insuring would be against the law.

What You Should Know About Insurance Underwriters An insurance underwriter is a professional who evaluates the risks involved when insuring people or assets and establishes the pricing. What Is Prospective Reinsurance? Prospective reinsurance is a reinsurance contract in which coverage is provided for future losses on insurable events. What Is Subrogation? Subrogation is the right of an insurer to pursue the party that caused the loss to the insured in an attempt to recover funds paid in the claim.

Investopedia is part of the Dotdash publishing family. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. Some insurance companies even guarantee the work of firms they recommend, but such programs are not available everywhere.

Make sure contractors get the proper building permits. Make sure you have figures to back up your claim for more money. If you and your insurance company still disagree, your policy allows for an independent appraisal of the loss. In this case, both you and your insurance company hire independent appraisers who choose a mediator. The decision of any two of these three people is binding.

You and your insurance company each pay for your appraiser and share the other costs. However, disputes rarely get to this stage. Some insurance companies may offer a slightly different way of settling a dispute called arbitration.

When settlement differences are arbitrated, a neutral arbiter hears the arguments of both sides and then makes a final decision. How you receive the money: When both the dwelling and the contents of your home are damaged, you generally get two separate checks from your insurance company.

If your home is mortgaged, the check for home repairs will generally be made out to you and the mortgage lender. As a condition of granting a mortgage, lenders usually require that they are named in the homeowners policy and that they are a party to any insurance payments related to the structure. The lender gets equal rights to the insurance check to ensure that the necessary repairs are made to the property in which it has a significant financial interest.

This means that the mortgage company or bank will have to endorse the check. Lenders generally put the money in an escrow account and pay for the repairs as the work is completed. You should show the mortgage lender your contractor's bid and say how much the contractor wants up front to start the job.

Your mortgage company may want to inspect the finished job before releasing the funds for payment. If you don't get a separate check from your insurance company for the contents of your home and other expenses, the lender should release the insurance payments that don't relate to the dwelling. It should also release funds that exceed the balance of the mortgage. State bank regulators often publish guidelines for banks to follow after a major disaster.

Contact state regulatory offices to find out what these guidelines are. Some construction firms want you to sign a direction to pay form that allows your insurance company to pay the firm directly. The firm then will bill your insurance company directly and attach the form you signed.

Make certain that you're completely satisfied with the repair work and that the job has been completed before signing any forms. If you have a replacement cost policy for your personal possessions, you normally need to replace the damaged items before your insurance company will pay. If you decide not to replace some items, you will be paid their actual cash value.

Your insurance company will generally allow you several months from the date of the cash value payment to replace the items and collect full replacement cost. Find out how many months you are allowed. Some insurance companies supply lists of vendors that can help replace your property. Some companies may supply some replacement items themselves. After your claim has been settled and the repair work is underway: Take the time to re-evaluate your homeowners insurance coverage. For example, was your home adequately insured?

Did you have replacement cost coverage for your personal property? Talk to your insurance agent or company representative about possible changes. Download a PDF version of this brochure. Next steps: Find out more about filing an insurance claim after a disaster. What you need to know about how to file a claim how the claim process works what's covered and what's not First steps Contact your agent or company immediately. To substantiate your loss, prepare an inventory of damaged or destroyed items and give a copy to the adjuster along with copies of any receipts.

You should also consider photographing or videotaping the damage. If your property was destroyed or you no longer have any records, work from memory. Identify structural damage to your home and other structures such as a garage, tool shed or in-ground swimming pool. Make a list of everything you want to show the adjuster, for example, cracks in the walls and missing roof tiles. You should also get the electrical system checked.

Most insurance companies pay for these inspections. Get written bids from licensed contractors.